Macau’s May Golden Week surprised operators and analysts alike, with gross gaming revenue (GGR) up by approximately 10 percent yearly, as visitation topped 40 percent, pushing up estimates for May.
Seaport Research Partners Senior Analyst Vitaly Umansky told AGB that the significant uptick “is encouraging” but questioned “how much of that upside was just brought-forward demand”.
The analyst opined that the coming weeks will be “critical” in seeing “how much of a drop off there is”, but if results continue to average at around MOP620-225 million ($77.56-78.2 million) per day in GGR for the rest of May, his predictions for May GGR are revised up to 5.3 percent yearly growth.
In a note on Wednesday, Umansky furthered that ‘if May comes in around our revised estimate, and there is continued relative strength into June (usually one of the weakest months of the year), we are likely to see upward revisions of estimates for 2025’.
Seaport currently estimates yearly GGR growth for FY25 at about 3.4 percent, before the upward revision in May, with likely revisions of Macau-related stocks if the GGR growth trend continues.
One particularly interesting fact pointed out by Umansky is that the holiday periods, which previously used to cause a drop in high rollers, are now attracting many premium players – with longer stay periods that can take advantage of the long weekends.
However, the mass market now compared to pre-pandemic is “much more top heavy than it used to be, so the volatility that you’re seeing is going to be greater, especially if you start looking at very short term periods”.
Another highlight is the amount of overall visitation – up nearly 41 percent, versus actual GGR uptick.
“What I think is clearly evident is that visitation itself is irrelevant (in regards to GGR),” notes Umansky. “I think the Macau government needs to think long and hard about what it is they’re trying to achieve,” he notes, highlighting how Macau has become much more accessible to lower spending day-trip visitors.
“That’s not the type of visitor you necessarily want, that creates congestion and doesn’t spend money”.
Umansky instead urges for the return of the “destination, overnight, bass mass customer”, hailing from locations such as Shanghai, or second- or third-tier cities in mainland China, particularly from the upper and middle class.
But multiple factors weigh on this uptick – increased flight and hotel costs, a weaker RMB and weakened consumer sentiment – which Umansky identified as “still abysmal in China”.
Looking at the operators themselves, Umansky notes its covered Macau-linked gaming operators are ‘largely undervalued’, in regards to stock price, with top picks of Las Vegas Sands and HK-listed subsidiary Sands China, and Galaxy ‘as both should of catalysts’ in the second half of the year ‘with share gains in Macau (and continued Singapore strength for LVS)’.
The group’s sole negative view is on SJM, which it attributes a ‘Sell’ rating to, due to its ‘high leverage, uncertainty surrounding the satellite business, and the lack of ability to materially take market share in Macau’.
